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Saudi Arabian Oil Prices in Asia Expected to Jump in November

Saudi Arabian oil prices expected to hike for all crude grades it sells to Asia in November. The attack on its oil facilities led to a spike in Middle East benchmarks last month, according to sources.

Flagship Arab Light crude’s official selling price (OSP) in November expected to rise by at least 50 cents a barrel. A Reuters survey of sources at five Asian refineries showed this from the previous month since July.

Also, the strike against key Saudi oil processing facilities on Sept. 14 caused the Kingdom’s output to fall by half. The affected companies are Arab Light and Arab Extra Light for 5.7 million barrels per day.

The disruption forced the state oil company, Saudi Aramco, to draw down inventories. Also, it switches grades, delay loadings, and cut domestic refinery throughput to meet supply pledge to customers.

Reuters’ calculations showed Cash Dubai’s spot premiums were on average 65% higher after the attack. Besides, DME Oman’s premiums were up 29% on average. A key indicator of light sour oil prices in Asia, Abu Dhabi’s Murban crude spot premiums surged to their highest. It is the first time since 2013 after the attack.

Moreover, a faster-than-expected restoration in Saudi Arabia’s production brought output back to levels. The attack led to expectations of a tempered price increase, according to the sources.

Also, a source with a North Asian refiner says the price hike for Arab Light is higher than 50 cents. This could support the view that Arab Light production might not have recovered fully. It was harder to forecast the Arab Heavy crude OSP for November. This is because of volatile fuel oil cracks, and Saudi Arabia provided additional supplies to some Asian buyers.

 

Saudi Arabian Oil Margins

Saudi Arabian oil gives Saudi crude a significant portion of fuel oil. Margins for the refining residue swung between minus $12 and $4 a barrel in September due to the Saudi attacks. Also, expectations that demand the fuel will shrink ahead of a change to lower sulfur fuel for ships from 2020.

The release of Saudi crude official selling prices is usually around the fifth of each month. Also, the trend will set for Iran, Kuwait, and Iraq prices affecting more than 12 million bpd of crude bound for Asia.

Furthermore, the State oil giant, Saudi Aramco, sets its crude prices based on suggestions from customers. Also, it is after calculating the change value of oil over the past month, based on yield and product prices.

Officials at Saudi Aramco do not comment on the Kingdom’s monthly official selling price. It is all because of the policy.

On Wednesday, oil prices fell more than 2%. Official data showed a rise in U.S. crude inventories. Also, it is a worry about an oversupplied market as weak economic readings in the United States depressed global financial markets.

Brent crude futures settled down $1.20, or 2%, at $57.69 a barrel. Also, U.S. WTI crude futures fell 98 cents, or 1.8%, to settle $52.64 a barrel.

Wall Street’s main indexes plummet more than 2% as data suggested fallout from the U.S.-China trade war. In a month, world equity benchmarks hit their lowest levels.



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